Mar 6, 2020 - Economy & Business

The banking industry's fake account scheme may have been widespread

Photo: Robert Alexander/Getty Images

The latest bank in the crosshairs of the Consumer Financial Protection Bureau is Fifth Third Bancorp, which disclosed in a securities filing this week that the CFPB is targeting the bank for “alleged unauthorized account openings,” American Banker's Kate Berry reported.

Why it matters: Wells Fargo has faced billions in fines and penalties and had been held up as a singular example of corporate wrongdoing for its account fraud scandal, but the disclosure of the complaint against Fifth Third could mean that there are one or many other shoes to drop.

  • It means the practice of forcing employees to create fake accounts for customers without their knowledge may have been widespread within the banking industry.

Flashback: Wells Fargo’s account fraud scandal also began with a CFPB enforcement action.

  • After the Wells Fargo scam came to light it was revealed the U.S. Office of the Comptroller of the Currency already was investigating 40 other banks for similar actions.
  • In September, Bank of America revealed that it was also under investigation by the CFPB for "potentially unauthorized credit card accounts.
  • Fifth Third only recently converted to a national bank charter from a state charter, so it was likely not involved in the OCC's investigation of national banks.

Go deeper: Wells Fargo agrees to pay $3 billion to settle consumer abuse charges

Go deeper

Wells Fargo CEO pitches new beginning for the bank

Wells Fargo CEO Charlie Scharf. Photo: Win McNamee/Getty Images

Charlie Scharf is the third CEO in three years to try to wrangle Wells Fargo out of the bad graces of regulators, lawmakers and consumers.

The big picture: Wells Fargo is facing bipartisan anger over its fake accounts scandal. Scharf spent four hours in front of Congress on Tuesday pitching a new vision of the bank, with the worst behind it.

Two Wells Fargo board members resign

Elizabeth Duke, shown in Senate testimony in 2008. Photo by Joshua Roberts/Getty Images

The chair of Wells Fargo's board of directors, Elizabeth Duke, resigned under pressure Sunday, days before she was scheduled to testify on Capitol Hill about the bank's fake accounts scandal — as did a second board member, James Quigley, who was also going to be grilled by lawmakers.

Why it matters: Wells Fargo is attempting to close the chapter on the systemic frauds that were exposed in 2016, when 5,200 employees were fired over 2 million fake accounts that were created. Evidence shows the bank did not satisfactorily clean up its act in the ensuing years, leaving Democratic lawmakers furious.

Most Americans say they have no savings

Reproduced from AARP via Deutsche Bank Research; Chart: Axios Visuals

The shock of the U.S. economy coming to a halt as more cities and states shut down businesses will be severe if lawmakers don't act quickly.

What's happening: AARP's latest study tracking U.S. household savings is based on a "yes" or "no" response to the following question: "Does your household have an emergency savings account?"